Document Date: 12 January 2007
Classification Chart: Extended Layoff Reasons and Higher-Level Reason Categories
I Business Demand Reasons
11
12
13
14
15
16
Contract cancellation
Contract completion
Domestic Competition
Excess inventory / saturated market
Import Competition
Slack work / insufficient demand / non-seasonal business slowdown
II Disaster/Safety Reasons
21
22
23
24
Hazardous work environment
Natural disaster (not weather related)
Non-natural disaster
Extreme weather-related event
III Financial Reasons
31 Bankruptcy
32 Cost control / cost cutting / increase profitability
33 Financial difficulty
IV Organizational Reasons
41 Business-ownership change
42 Reorganization or restructuring of company
V Production Reasons
51
52
53
54
55
56
57
58
Automation / technological advances
Energy related
Governmental regulations/intervention
Labor dispute / contract negotiations / strike
Material or supply shortage
Model changeover
Plant or machine repair/maintenance
Product line discontinued
VI Seasonal Reasons
61 Seasonal
62 Vacation Period—school related or otherwise
IX Other/Miscellaneous Reasons
91
96
97
98
99
Other
Federal government cutbacks—Not Defense Related [Secondary reason or comment field only]
Federal government cutbacks—Defense-related [Secondary reason or comment field only]
Data not provided: Refusal
Data not provided: Does not know
MLS/ Reasons/ Reasons Structure [011207]
Document Date: 12 January 2007
Table 1: Definitions for Layoff Reasons and for Higher-Level Reason Categories
I
Business Demand Reasons: This set of layoff reasons is associated with a decreasing or an
unfavorable level-of-demand for a company’s products/services that can be attributed to
conventional economic factors and/or cycles. Changes in consumer preferences, increased
competition, and concluded contractual agreements (either by completion or early termination)
can lead a firm to lower output (and therefore its needed workforce) to reflect lower demand for
its products/services. Events attributable to slumps in demand due to seasonal factors (e.g.,
post-holiday slumps in retail sales) should be coded under Category VI: Seasonal Reasons.
ƒ
11. Contract cancellation: Use this code if the respondent states that the layoff was caused
by the cancellation of a contract. More specifically, this code should be used for formal
contracts already entered into and subsequently cancelled—and not contracts that may have
been “lost” in a bidding process (see code 12: contract completion).
ƒ
12. Contract completion: Use this code if the respondent reports that a single contract (or
project) supporting a large number of employees has ended. The respondent should
specifically state that a large contract has been completed or lost in a re-bidding process.
ƒ
13. Domestic Competition: Use this code for layoffs that are precipitated by domestic
competition involving the production of goods (e.g., automotive parts; computers;
chemicals; prescription drugs; plastic containers; military equipment) or the delivery of
services (e.g., airline transportation; banking services; retail sales). Unlike products or
services that originate elsewhere (e.g., Canada, Mexico, Europe, China, India), domestic
products and services originate within the United States. Since a response of “competition”
is ambiguous as to type (i.e., domestic or import competition), it will be necessary to probe
to determine its nature. Here is a potentially useful probe for such situations: “Is the
competition you mentioned coming mainly from companies that produce goods and services
here in the United States, or is it mainly import competition.” In rare cases, a respondent
may answer “both” to the probe question posed above. In such cases, we suggest that you
ask: “Which form of competition has had a more serious impact on your company, domestic
or import competition?” If the respondent says that import competition has had the more
serious impact, code that as the primary reason and code domestic competition as the
secondary reason. If domestic competition has had the greatest impact, code that as the
primary reason and import competition as the secondary reason.
ƒ
14. Excess inventory/saturated market: Use this code if the respondent reports that the
layoffs are due to a slowdown in business due to excesses in the company’s product
inventory or when the market is saturated with comparable products or services. Saturation
invariably leads to excess inventories and such excesses often precipitate layoffs.
ƒ
15. Import Competition: Use this code if the respondent identifies import competition as
the primary cause for the layoff. This code covers any product (e.g., automobiles; toys;
video equipment) manufactured outside the United States (e.g., Europe, China, India,
Canada). It also encompasses import competition for services (e.g., banking or credit-card
services; software development; telemarketing; product marketing). Since a response of
“competition” is ambiguous as to type (i.e., domestic or import competition), it will be
necessary to probe to determine its nature. Here is a potentially useful probe for such
situations: “Is the competition you mentioned coming mainly from companies that produce
goods and services here in the United States, or is it mainly import competition.” In rare
cases, a respondent may answer “both” to the probe question posed above. In such cases,
we suggest that you ask: “Which form of competition has had a more serious impact on
Document Date: 12 January 2007
your company, domestic or import competition?” If the respondent says that import
competition has had the more serious impact, code that as the primary reason and code
domestic competition as the secondary reason. If domestic competition has had the greatest
impact, code that as the primary reason and import competition as the secondary reason.
ƒ
II
16. Slack work/insufficient demand/non-seasonal business slowdown: Use this code if
the respondent states that the layoff was caused by a non-seasonal lack of demand for the
company’s products or services (e.g., an unexpected lack of orders for software products or
for accounting services). Because some responses to our question about the layoff reason
(such as “slack work”; “economic slowdown”; “demand slump”; “declining orders or
production”; “lack of work”; “poor business conditions”) often imply the presence of other
contributing causes for the layoff, it is important that interviewers probe in an effort to
determine what these other secondary or contributing reasons might be (e.g., contract
completed; excess inventory/market saturation). Here is a potentially useful probe for such
situations: “Would you happen to know what might have caused the [fill with respondents
answer (e.g., “slack work”) at your company?” If a respondent answers with, say, “just
completed a large contract”, enter code 12 (contract completed) as the secondary-reason
code and code 16 (slack work/insufficient demand/non-seasonal business slowdown) as the
primary-reason code (see Note 1 at the end of this document). If other contributing causes
are mentioned, enter these codes/reasons in the comments field (see Note 2).
Disaster/Safety Reasons: This set of layoff reasons is associated with a dramatic decrease in
demand for a company’s products/services that can be attributed to disasters of a natural, sociopolitical or work-related nature. Disaster-related layoffs may occur due to shrinking demand
within a particular industry (e.g., the impact of September 11, 2001 on the air-travel industry) or
because a company can no longer productively employ workers as the result of damage to
necessary infrastructure or production capability (e.g., furloughs due to a plant fire).
ƒ
21. Hazardous work environment: Use this code if the respondent reports a business
cutback or closure because of a safety or environmental hazard (e.g., elevated levels of
natural gas inside a mine shaft; high levels of asbestos in the air-filtration system). Business
cutbacks/closures (and the layoffs that often follow) can be imposed by the company itself
or by government actions/interventions; if the respondent specifically mentions the role of
government in the cutbacks/closure (e.g., enforcement of environmental regulations), enter
code 53 (government regulations/intervention) as the secondary-reason code.
ƒ
22. Natural disaster (not weather related): Use this code if the respondent reports that the
layoff that was precipitated by a natural disaster (e.g., earthquake, insect infestation, tidal
wave, volcanic eruption). Please note that, as defined here, natural disasters are not
weather-related.
ƒ
23. Non-natural disaster: Use this code if the respondent reports that work activity has
been curtailed/suspended—and layoffs implemented—as a consequence of a disaster caused
by the misguided or malevolent behavior of human beings (e.g., the terrorist attacks of
September 11, 2001) or as a consequence of some other disaster that is not weather related
(e.g., building collapse; chemical plant explosion/fire; mine collapse/explosion; oil spill).
ƒ
24. Extreme weather-related event: Use this code if the respondent reports that the layoff
was caused by an extreme weather-related event, such as: flooding, blizzard conditions,
damaging hail, prolonged drought, hurricanes, damaging frost, tornadoes, squalls, dust
storms, or fires triggered by electrical storms. If the weather event results in plant/machine
damage that requires repair work, use code 24 (extreme weather-related event) as the
Document Date: 12 January 2007
primary-reason code and code 57 (plant or machine repair) as the secondary-reason code. If,
on the other hand, the company experiences a shortage in materials because an extreme
weather event affected the production or delivery of those materials by outside suppliers,
use code 55 (material shortage) as the primary-reason code and code 24 (extreme weather
related event) as the secondary-reason code.
III
Financial Reasons: This set of layoff reasons is associated specifically with a company’s
attempts to cope with (or reverse) a financial situation that is unacceptable or unsustainable.
Layoffs reduce costs associated with labor and have the potential to increase cash flow, either
before a bankruptcy filing or as part of the filing itself. Layoffs also have the potential to
increase profitability in certain situations. This category of reasons specifically address the
firm’s “bottom-line.” Events where layoffs are part of a business reorganization or restructuring
should be coded under Category IV: Organization Reasons.
ƒ
31. Bankruptcy: Use this code if the respondent reports that the company responsible for
the mass layoff actually filed for bankruptcy under one of the chapters of Bankruptcy Law
and/or “reorganized” in compliance with such laws. This should be confirmed by the
respondent, if possible. “Reorganization” (as used in the context of a bankruptcy) has been
defined as the revamping of a company’s capital, organization and/or management structure
along the lines of a plan worked out under bankruptcy proceedings (Chapter 11) and its
objectives are to eliminate the cause of the failure, settle with creditors, and allow the firm
to remain in business. It would be analytically useful to know what may have contributed to
the bankruptcy, so if respondents do not spontaneously provide such information,
interviewers should probe to see if a contributing cause can be determined. If a
contributing cause can be determined (e.g., contract cancellation; import competition), insert
that code as the secondary-reason code for the layoff and enter code 31 (bankruptcy) as the
primary-reason code. If the respondent gives a reply not covered by any existing reason
codes (e.g., embezzlement; managerial incompetence), again insert the code 31 as the
primary-reason code and enter code 91 (“other”) as the secondary-reason code. Please note
that code 91 (“other”) requires the interviewer specify the respondent’s verbatim response.
ƒ
32. Cost control/cost cutting/increase profitability: Use this code if the respondent
reports that layoffs are an attempt to offset increases in various business costs (e.g.,
employee health insurance; debt payments; raw materials; wages), to reduce or eliminate
losses (e.g., budget deficits), or to restore or enhance profitability/earnings (e.g., to improve
the company’s “bottom line”).
ƒ
33. Financial difficulty: Use this code if the respondent states that the layoff as an attempt
to deal with the company’s troubled financial situation (e.g., a shortage of ready cash due to
a substantial debt burden) or for other cash flow problems that have not yet risen to a level
requiring a bankruptcy filing. Keep in mind, however, that the company’s financial
difficulty may actually be due to some unspecified contributing cause (e.g., a merger or
acquisition; long overdue payments for products/services already delivered; loss of expected
revenue due to the cancellation of a major contract). So, if a respondent simply answers
“financial difficulty,” interviewers should probe to determine if a contributing cause can be
identified. If a contributing cause can be identified (e.g., contract cancellation; import
competition; extreme weather-related event), enter the code for that reason as the secondaryreason code and enter code 33 (financial difficulty) as the primary-reason code. [See Notes
1 and 2 (found at the back of this document) for guidance on how to assign and code
reasons if the respondent mentions several reasons for an extended layoff event.]
Document Date: 12 January 2007
IV
Organizational Reasons: This set of layoff reasons refers specifically to significant changes in
the company’s organization, its corporate structure or its ownership. Layoffs due to a change in
ownership or to restructuring, whether imposed from within or without, should be included here.
Events that reduce employment but do not alter the firm’s organizational structure should be
coded elsewhere.
ƒ
41. Business-ownership change: Use this code whenever the respondent reports a change
in business ownership (e.g., the sale of the business to an individual or another company) as
the precipitating cause for a layoff. This code is appropriate in those cases where the
respondent reports that a layoff was necessary to deal with the aftermath of a merger, an
acquisition, a divestiture, or a leveraged buyout. A merger is the combining of two or more
independent businesses under a single ownership (e.g., bank merger), accompanied by the
complete acquisition of one company's stock by another, either for cash or stock in the
acquiring company. An acquisition is the process by which all or part of one company
becomes part of another company (e.g., a large computer company purchases a smaller
company with an attractive software product). A divestiture is the process of getting rid of a
subsidiary because it has ceased to be profitable or because the parent company needs cash,
et cetera (e.g., an automotive corporation that sells its rental car company). A leveraged
buyout is the purchase of outstanding shares in a company by a management group, which
puts up relatively little cash and uses the company and its assets as collateral to borrow large
sums for making a publicly-owned company revert to private ownership.
ƒ
42. Reorganization or restructuring of company: Reorganization is a strategy that firms
often employ as a means of attaining greater efficiency and/or adapting to new markets.
Use this code if the layoff experienced at a particular firm is the result of changes in the way
a company is organized (e.g., the elimination of a particular division within a company or
the downsizing of a particular group of line workers or middle managers). Though the goals
and objectives are similar, the restructuring of a company tends to involve changes that are
more comprehensive in scope (e.g., changes in management; outsourcing of operations; sale
of underperforming units; reorganization of business functions; renegotiation of labor
contracts; refinancing of debt). Some data users may find it analytically useful to know
what might have contributed to the company’s decision to reorganize or restructure; so, if
respondents do not spontaneously provide such information, interviewers should probe to
see if a contributing cause for the reorganization/restructuring can be determined. If a
contributing cause can be determined (e.g., financial difficulty; import competition), then
enter the appropriate code as the secondary-reason code and enter code 42
(reorganization/restructuring) as the primary-reason code. Remember: If the respondent
reports that the layoff is one aspect of a business/company reorganization resulting from
bankruptcy proceedings, then use code 31 (bankruptcy) as the primary-reason code as use
code 42 (reorganization) as the secondary-reason code.
Document Date: 12 January 2007
V
Production Reasons: This set of layoff reasons is associated with factors (events, processes,
technological advances) that affect a company’s ability to manufacture a given product or
provide a given service. Though some of these factors will have a negative impact on
output/productivity (e.g., government intervention, material shortage) and others a positive
impact (e.g., automation and technological advances), all have the effect of decreasing the
amount of labor a firm requires or wants.
ƒ
51. Automation/technological advances: One of the obvious side-effects of technological
advances is the substitution of more-efficient/more-productive capital equipment for
production and service workers, and the corresponding reduction in labor requirements (i.e.,
layoffs). Use this code if the respondent reports that the layoff is due to automation in the
workplace (e.g., automated checkout machines in grocery stores), new technology (e.g.,
computerized inventory control) and/or other technology-based improvements to production
facilities or operational procedures (e.g., the use of robotic technology on assembly lines).
ƒ
52. Energy related: Use this code if the respondent reports that the layoff occurred either
because of the excessive cost of energy or the disruption of the supply of energy to the
worksite/establishment/company.
ƒ
53. Governmental regulations/intervention: Use this code if the respondent reports that a
layoff was a direct or indirect result of governmental regulations (e.g., changes to pollution
laws related to energy production) or a specific governmental intervention (e.g., legal action
against a rogue accounting firm). For example, the National Do-Not-Call List (i.e., a
governmental regulation enacted in 2005 restricting unsolicited calls to home telephones),
though it has greatly reduced unsolicited intrusions in many households, has resulted in
reduced business and in some cases the closure of less-competitive telemarketing firms.
ƒ
54. Labor dispute/contract negotiations/strike: Use this code if the respondent reports
that the layoff was the result of a strike, protracted contract negotiations or a labor dispute.
For example, if a construction firm lays off employees because a servicing trade union goes
on strike and delays the construction project, use this code. On the other hand, if a strike
occurred at an outside supplier of materials causing a slowdown of work at the construction
site (and a subsequent layoff), code 55 (material shortage) should be assigned as the
primary-reason code and code 54 (labor dispute/contract negotiations/strike) should be
assigned as the secondary-reason code.
ƒ
55. Material or supply shortage: Use this code if the respondent reports that the layoff
was caused by a shortage of materials (e.g., drywall or framing wood used for home
construction) or a shortage of supplies (e.g., microprocessors for laptop computers)
provided by outside contractors/firms. If the impact of a contributing cause is suspected,
interviewers should probe to obtain a secondary code for the shortage. For example, if an
outside supplier was affected by unusual/extreme weather and this delayed the delivery of
needed materials, enter code 55 (material shortage) as the primary-reason code and code 24
(extreme weather-related event) as the secondary-reason code.
ƒ
56. Model changeover: Use this reason for layoffs traditionally associated with
automotive industries, but which also occur in various other durable goods manufacturing
industries. Model changeovers not only affect major automobile manufacturers but also
have secondary effects on related industries like tool and die job shops, tire companies, and
parts suppliers. Use this code for those related firms if linkage can be made to the model
changeover affecting their primary customer. For example, if GM lays off 5000 employees
in June for a model changeover, code 56 would be the obvious choice. But if a company
Document Date: 12 January 2007
that supplies tires to GM has to lay off 100 of their own employees as a result of GM’s
model changeover, assign code 16 (slack or insufficient work) as the primary-reason code
and code 56 (model changeover) as the secondary-reason code.
VI
ƒ
57. Plant or machine repair/maintenance: Use this code if the respondent reports that
the layoff was the result of regular maintenance work or caused by a breakdown (and
subsequent repair) of plant equipment or machinery. Layoffs that occur as a result damage
to the plant or production machinery caused by severe/extreme weather should be assigned
code 24 (extreme weather-related event) as the primary-reason code, and code 57 (plant or
machine repair/maintenance) as the secondary-reason code.
ƒ
58. Product line discontinued: Use this code if the respondent reports that the layoff was
caused by the discontinuation of a particular product (e.g., SUVs) or group of products (e.g.,
all high gross-weight vehicles, like SUVs and heavy trucks). Interviewers might want to be
alert for a possible contributing cause here (e.g., decreased demand due to the high cost of
gasoline) and probe if they suspect one exists. For example, if the respondent at a Ford
plant in Michigan reports that his company is discontinuing production of its high-end SUV
because of slack demand, enter code 58 (product line discontinued) as the primary-reason
code and enter code 16 (slack work/insufficient demand/non-seasonal business slowdown)
as the secondary-reason code.
Seasonal Reasons: This set of layoff reasons is associated with a decrease in demand for a
company’s products/services that can be attributed to natural cycles or to cultural/societal
practices that are seasonally determined. For instance, agriculture (based on natural cycles),
education (based cultural/societal practices and natural cycles), and retail (moderated in part by
natural cycles and cultural/societal practices) are all economic sectors that exhibit high degrees
of seasonality in employment and mass layoffs.
ƒ
61. Seasonal: Use this code if the respondent reports that the layoff was due to normal
seasonal trends, such as the downsizing of retail employment after the Christmas holidays,
or of summer/winter recreational staff during the off-season months, or of persons employed
in canning operations/activities following crop or fish harvesting.
ƒ
62. Vacation period—school-related or otherwise: Use this code if the respondent
reports that the layoff was associated with school vacation (e.g., a decline in school-related
business activities during the summer months, such as food and transportation services) or
with other extended vacation periods. Employer-imposed “vacations” prompted by
extraordinary events (e.g., extreme weather, natural disaster, or strike) or by contractual
agreements (i.e., contract completions) should be assigned a primary-reason code consistent
with the actual reason for the layoff; in such cases, code 62 (vacation period) would be
assigned as the secondary-reason code. Experienced interviewers should probe to verify (or
ascertain) the actual cause for the layoff if “vacation period” does not fit expectations for the
company, the industry, the season or the geographic region.
Document Date: 12 January 2007
IX
Other/Miscellaneous Reasons: With the exception of codes 98 and 99, the layoff reasons in
this category have the potential to affect a company’s ability to manufacture a given product or
provide a given service, but they are not readily classified into any of the six categories
specified above.
ƒ
ƒ
ƒ
ƒ
ƒ
91. Other: Use this code if the respondent reports that the layoff was caused by some
event or situation (e.g., legal trouble; low growth rate; low productivity; mismanagement;
privatization) not covered by one of the reason codes specified above. Please note that any
response coded as “other” must be accompanied by an explanation in the comments section
specifying the actual/verbatim layoff reason as communicated by the respondent.
96. Federal government cutbacks—Not Defense Related [Secondary reason or
comments field, only]: This code should be used when discussion with the employer
determines that the layoff in question was precipitated/caused by a non-defense-related
Federal government cutback (e.g., across-the-board discretionary budget cuts). This code
should not be assigned as a primary-reason code; code 96 can be assigned as a secondaryreason code or, in the case where multiple reasons are provided, as a contributing reason
captured in the comments field.
97. Federal government cutbacks—Defense-related [Secondary reason or comments
field, only]: This code should be used when discussion with the employer determines that
the layoff in question was precipitated/caused by a defense-related Federal government
cutback (e.g., base closings). This code should not be assigned as a primary-reason code;
code 97 can be assigned as a secondary-reason code or, in the case where multiple reasons
are provided, as a contributing reason captured in the comments field.
98. Data not provided: Refusal. Use this code to signify contact with a firm that
otherwise satisfies MLS layoff criteria but whose representative/spokesperson was
uncooperative or refused to provide the reason for the extended layoff event.
99. Data not provided: Does not know. Use this code to signify contact with a firm that
otherwise satisfies MLS layoff criteria but whose representative/spokesperson could not
provide the reason for the extended layoff event either because she/he did not know the
reason or because such information was not made available to him or her.
***
Note 1: “Primary” and “secondary” reasons for extended layoff events: In differentiating
between these two classes of reasons, this brief explanation may be helpful. The primary
reason for an extended layoff event is the economic or business-related “straw that broke the
establishment/company’s back” and directly precipitated/caused the layoff event. Oftentimes,
however, there are contributing causes (economic or environmental factors/conditions) that
precede or co-occur with the precipitating/primary cause—we refer these causes/factors/
conditions as secondary reasons. If made available by the respondent, it is useful to gather data
on both primary and secondary reasons.
***
Note 2: General guidance when multiple layoff reasons are provided: If, when identifying
the reasons for an extended layoff event, the respondent mentions a set/series of three of more
reasons/causes for a layoff event, attempt to determine what the most important and the
second/next most important reasons might be. The most important reason should be assigned
the primary-reason code and the second most important reason should be assigned the
secondary-reason code. Enter any other reasons into the comments field. If the respondent finds
it too difficult to designate specific reasons as primary or secondary, you may need to draw on
experience and make these judgments yourself.
Document Date: 12 January 2007
Coding Form Based on an Alphabetical Listing of Extended Layoff Reasons
51: Automation / technological advances
31: Bankruptcy
41: Business-ownership change
“Competition” (see Import Competition and Domestic Competition)
11: Contract cancellation
12: Contract completion
32: Cost control / cost cutting / increase profitability
98: Data not provided: Refusal
99: Data not provided: Does not know
13: Domestic Competition
52: Energy related
14: Excess inventory / saturated market
24: Extreme weather-related event
96: Federal government cutbacks—Not Defense Related [Secondary reason or comment field only]
97: Federal government cutbacks—Defense-related [Secondary reason or comment field only]
33: Financial difficulty
53: Governmental regulations/intervention
21: Hazardous work environment
15: Import Competition
54: Labor dispute / contract negotiations / strike
55: Material or supply shortage
56: Model changeover
22: Natural disaster (not weather related)
23: Non-natural disaster
91: Other
57: Plant or machine repair/maintenance
58: Product line discontinued
42: Reorganization or restructuring of company
61: Seasonal
16: Slack work / insufficient demand / non-seasonal business slowdown
62: Vacation Period—school related or otherwise
“Weather—unusual or extreme” (see Extreme weather-related event)
MLS/Reasons/ Reasons Structure 011207